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1 A Political and Economic Vision of Climate Change
“The Moral Dimension of Climate Change”
Workshop
Holy See, April 28, 2015
La tierra, que es madre para todos, pide
respeto y no violencia o peor aún arrogancia de
patrones. Debemos entregarla a nuestros hijos
mejorada, custodiada, porque ha sido un
préstamo que ellos nos hicieron a nosotros.
Papa Francisco
Earth, which is mother to all of us, asks for
respect and not violence, or worse still, the
arrogance of bosses. We must hand it over to
our children, improved, well-cared for, because
she is a loan that has been made to us.
Pope Francis
Introduction
Global warming and climate change are no longer just a theory of a
very few scientists: it is a cruel reality.
This is evidenced by the growth curve of global emissions of CO2 in
the last 50 years. In 1960, worldwide emissions were 9.4 metric giga
tons of CO2, and in 2010, 33.6 metric giga tons. They have multiplied
3.6 times in 50 years, that is, an average annual increase of 2.6%. If
this trend continues, in 28 years current emissions will have doubled.
Climate change and its consequences should be treated as an ethical
problem, for individuals and human society.
2 The paradox: Open environment and closed knowledge
There is a new and unjust international division of labor: rich nations
generate knowledge that they privatize, while many poor nations
generate environmental assets that are freely accessible.
Knowledge, in general, is a freely accessible asset. Exclusion is
technically impossible, or very costly. In order to prevent free access,
that is to say, to privatize this asset, institutional barriers are raised,
mainly in the form of intellectual property rights. The nations of the
Amazon region, the lungs of the planet, also produce assets that are
freely accessible, environmental assets that regulate the world’s
climate and without which life on this planet would suffer serious
harm. Despite this, the major polluters of the world pay nothing to
consume these environmental assets and services. The Kyoto
Protocol should be interpreted as an institutional barrier to prevent
the consumption of these environmental assets, but the large
polluters will not sign Kyoto, while in most of these nations you can
go to jail if you copy an idea protected by a patent.
Completing Kyoto: Net Avoided Emissions
Furthermore, the incentives given by Kyoto for the protection of the
environment were insufficient, inefficient, and unjust. For example, in
the area of reforestation, the system rewards those nations that
reforest, but fails to compensate those nations that have not deforested and whose forests already are contributing to the reduction
of carbon. Kyoto lacks a concept that comprehensively defines what
would be compensated. This comprehensive concept is Net Avoided
Emissions (or NAE, in English).1
1
Concept presented by the Republic of Ecuador at the 16th International Conference
on Climate Change held in Cancun, Mexico, on December 8, 2010.
3 NAE are emissions that the economy of a country could produce, but
doesn’t, or emissions that already exist in the economy of a country,
but are reduced. Therefore, what the Net Avoided Emissions would
compensate is the net balance. This concept reconciles the initial
compensations
of
Kyoto
and
the
REDD
mechanism
(reducing
emissions from deforestation and forest degradation), a United
Nations program that pays to prevent deforestation. The REDD
mechanism adds an important idea: compensation for abstention, in
other words, for not doing something that you have the right to do,
but it just compensates keeping the carbon on the surface of the
Earth, omitting, for example, compensation of keeping the carbon
underground, as in the case of not exploiting fossil fuels. Net Avoided
Emissions includes compensation for actions and abstentions, and
incorporates all the economic activities that are involved in the
exploitation and use of renewable and non-renewable resources.
If the incentives of Kyoto are expanded to include Net Avoided
Emissions, in addition to the objectives of climate change, it would
mean a revolutionary transformation in international trade, as it
would allow many nations – especially developing ones – to convert
their economies based on the extraction of highly polluting fossil fuels
into economies that are exporters of environmental services.
Let me introduce a core idea for any debate about sustainability:
conservation, in poor nations, will not be possible if it does not
result in clear and direct improvements in the standard of
living of the people.
Given that Net Avoided Emissions is a comprehensive concept that
significantly expands the possibilities for compensation, we should
limit the uses of these funds, mainly for more prevention, mitigation,
and adaptation; to make less vulnerable those nations that are facing
the consequences of climate change. In addition, if the compensation
is always lower than the financial yield produced by the action or
abstention, it will generate restrictions to ensure that only those
4 nations truly committed to the fight against climate change receive
compensations.
A concrete example would be the Yasuní-ITT initiative, which sought
to leave underground the largest confirmed petroleum reserves in
Ecuador. Ecuador asked for compensation for not exploiting this
reserve and to prevent sending 400 million metric tons of CO2 into
the atmosphere. The compensation requested amounted to barely
half the financial yield that would have resulted from exploiting the
petroleum, and the funds would be used for further conservation.
Miguel d’Escoto, former President of the UN General Assembly, called
the initiative “the most important and concrete proposal for moving
from rhetoric to deeds related to climate change”. Sadly, the initiative
failed because it was greatly misunderstood and because of power
issues.
The idea of compensating NAE is anchored on valid environmental,
economic, and fairness principles. About environmental issues, as
noted, what is important is the net balance, and in net terms, not
polluting the environment is the equivalent of cleaning it. Regarding
economic logic, environmental goods and services, being freely
accessible, do not have explicit market prices. Therefore, the
compensations for creating or maintaining environmental assets is
based on the need to pay for the generation of value and not only for
the generation of merchandise, in order to achieve the maximum
social well-being.
Regarding fairness, it is fair to compensate a nation for not
performing an action it has the right to perform, when this individual
action is not good for the planet; that is, when it has negative
externalities. In the same way, if a nation does not have an obligation
to perform an action that is not desirable individually, but is
ultimately good for the planet, in other words, produces positive
5 externalities, it is fair that it should be compensated for performing
that action.2
Ecological Debt
Independently from the compensations for Net Avoided Emissions,
there undoubtedly exists an ecological debt, obligations accumulated
over time, the consequence of plundering natural resources, bio
piracy, and climate change. Payment of this debt is based on human
rights, environmental justice, and historical responsibility.
Ecological debt can be expressed in monetary or biophysical terms.
Contributions
with
plausible
calculations
have
come
from
the
academia, but the most important thing is not paying the ecological
debt, but preventing it from growing even more3. We must stop the
damage and repair the current condition of the physical world.
Common but differentiated responsibilities
Compensations for NAE and for the ecological debt ought to be based
on the principle of common but differentiated responsibilities. Just
two nations, China and the United States, produce 44% of total
emissions worldwide. If we add India, Russia, and Japan, emissions
reach almost 60% of the total.
The Gini inequality coefficient for emissions of CO2 per capita by
nation, calculated for the year 2010, was 0.596.4 This means that
20% of the world population, who pollute the most, are responsible
for 51% of global CO2 emissions, while the 20% who pollute the least
are responsible for barely 1.3% of total emissions.
2
See Coase, Ronald (1960). The Problem of Social Cost. 3 Journal of Law and
Economics: 1-44.
3
See Warlenius, R., G. Pierce, and V. Ramasar (2015) Reversing the arrow of
arrears: The concept of “ecological debt” and its value for environmental justice.
Global Environmental Change. Volume 30: 21–30.
4
The Gini coefficient moves between the values of 0 and 1. The zero value
corresponds to absolute equality. The value of one, in contrast, represents absolute
inequality. In this case, the Gini index is a measure of the concentration of
emissions. A value of 0 would mean that all nations have an equal level of
emissions per capita. A value of 1 would mean that a single nation emits all the CO2
and nobody else emits.
6 Compensations for Net Avoided Emissions should also be established
on the capacities of the respective nations. The greatest ecological
damage comes from wealthy nations. In spite of technological
improvements and the dematerialization of the economy, that is, the
reduction of the amount of materials and energy per unit of
production, evidence shows that the consumption of energy and the
generation of emissions are directly proportional to the level of
income. A person in a rich nation emits 38 times more CO2 than a
person in a poor nation. The consumption effect dominates the effect
of efficiency resulting from improvements in technology.5
This
doesn’t mean that there is no deterioration linked to poverty, such as
soil erosion, lack of treatment of solid waste, etc., but the way in
which
wealth
and
consumption
are
managed
in
wealthy
and
industrialized societies becomes a critical factor to determine who is
responsible for the largest environmental impacts.
Compensation through access to science and technology
However, there is a crucial problem: technology gaps. In the year
2011, the average energy efficiency of high-income nations was 5
times greater than the average efficiency of low-income nations.
Access to science and technology is vital for poor nations to fight
climate change. It is essential to declare the technologies that
mitigate climate change as global public goods, and to guarantee
free access to them.6 This would be a way to put an end to the new
and unjust international division of labor.
Compulsory licenses, a regulatory measure in the area of intellectual
property rights, prevent businesses from retaining monopolistic rights
5
See Correa, R. and F. Falconí (2012). Después de “Río + 20”: Bienes ambientales
y relaciones de poder. Revista de Economía Crítica, N° 14: 257-276.
6
A public good is one that, besides not having the capacity for exclusion, has no
competition in consumption (technically, the marginal cost of an additional
beneficiary is 0). For example, a landscape: there is free access and one person’s
enjoyment of it does not prevent enjoyment by another. Knowledge is generally a
public good. For example, technically it is easy to copy software, and its use by one
person doesn’t prevent use by another.
7 to critical knowledge and allow other businesses around the world, to
replicate patented technologies. This knowledge is not confiscated
from the inventors, since the innovation ought to be recognized and
their inventors should be compensated with a royalty. This royalty
could be financed with the same compensations resulting from Net
Avoided Emissions; with global resources allocated to the fight
against climate change, like the various funds of the United Nations;
and with the creation of global taxes, such as the Daly tax.
Daly Tax
The Daly tax is an ad-valorem tax on the price of a barrel of
petroleum, which could be administered by the Organization of the
Petroleum Exporting Countries (OPEC).7 This eco-tax should also be
applied to other fuel exports, in proportion to their environmental
impact. The effect would be a reduction in the demand for petroleum
– and consequently, less production of CO2, and the generation of
income to pursue three objectives: first, to compensate poor oil
importing nations, affected by this tax, by financing programs to
eradicate poverty.
Second, to finance the reduction of greenhouse
gases, for example, through research and technological development
and diversification of the energy matrix; and third, to finance poor
nations in their efforts to prevent, mitigate, and adapt to the
consequences of climate change.
The power of OPEC gives it immense opportunities to have a positive
influence on the history of humanity. With the administration of this
tax, OPEC could transform itself into the great world coordinator in
the fight against CO2 emissions and climate change.
7
See Daly, Herman (2007). Ecological economics and sustainable development:
selected essays of Herman Daly. Edward Elgar Publishing.
The Republic of Ecuador also proposed this eco-tax at the III Summit of OPEC held
in Riyadh in 2007.
8 Basic problem at the individual level: our way of life
Now we know that the economy is part of a larger system, governed
not by the economic laws of supply, demand, and prices, but by the
physical laws of nature.8
At least with the presently available technology, to generalize the
standard of living of the so-called developed countries is simply
impossible, since sufficient resources would not exist in the planet.
This generalization is probably also undesirable: increases in GDP per
inhabitant, after reaching a certain threshold, are not related to a
greater perception of happiness. This is known as the “Easterlin
Paradox”.9
This means that we must visualize a new notion of development,
as several countries are already doing, centered on the concept of
Sumak Kawsay -or Good Living- of the ancestral Andean peoples,
which means to live with dignity, satisfying basic needs, but in
harmony with oneself, with the rest of humanity, with different
cultures, and in harmony with nature.10
For this reason, we need to advance towards a Declaration of the
Rights of Nature. The most important universal right of nature should
be that it can continue to exist but, also, that it can continue to
provide the means of living so that our societies can enjoy Sumak
Kawsay.
8
See Georgescu-Roegen, Nicholas (1971). The Entropy Law and the Economic
Process. Harvard University Press.
9 See Easterlin, Richard (1974). Does economic growth improve the human lot?
Some empirical evidence, in Paul A. David and Melvin W. Reder, eds., Nations and
Households in Economic Growth: Essays in Honor of Moses Abramovitz, New York:
Academic press, Inc.
10
Ecuador has presented to the world alternatives to conventional development and
recognizes in its new Constitution, approved by popular vote in 2008, the rights of
nature.
9 Here is another core idea, to avoid certain fundamentalisms:
humans are not the only important beings in nature, but they
continue to be the most important ones.
A basic problem at international level: power relations
The new international division of labor is a total paradox. Common
and freely accessible goods must be those with no rivalry in
consumption, that is to say, goods that don’t have a marginal cost if
someone else uses them. As a result, the more the people that use
them, the better. This is normally the case with knowledge, science,
and technology.
As George Bernard Shaw correctly noted: “If you have an apple and I
have an apple and we exchange these apples, then you and I will still
each have one apple. But if you have an idea and I have an idea and
we exchange these ideas, then each of us will have two ideas.”
When a good becomes scarce or is destroyed when consumed, like
nature and the resulting climate change, its consumption ought to be
restricted, in order to prevent what Garrett Hardin called “the tragedy
of the commons”.11
Why don’t we do what is obvious? Even more so, why do we do
exactly the opposite? Because the problem is not technical, it’s
political. The new unjust international division of labor is nothing
more than the perverse ethics of “privatizing profits and socializing
losses”. There is nothing that justifies it, only power. To illustrate
this, let us imagine for a moment that the situation were reversed,
and that the generators of environmental goods and services were
the wealthy nations, and the poor nations were the polluters. Surely,
already there would have been invasions to force them to pay a “just
compensation”.
11
See Hardin, Garrett (1968), The Tragedy of the Commons, Science, Vol. 162, No.
3859, pp. 1243-1248.
10 Sadly, as Thrasymachus said over two thousand years ago in his
dialogue with Socrates, “justice is nothing but the advantage of the
stronger”.
11 BIBLIOGRAPHY
Coase, Ronald (1960). The Problem of Social Cost. 3 Journal of
Law and Economics: 1-44.
Correa, R. and F. Falconí (2012). Después de “Río + 20”: Bienes
ambientales y relaciones de poder. Revista de Economía Crítica,
N° 14: 257-276.
Correa, Rafael. Speech on Climate Change. 16th International
Conference on Climate Change. United Nations. Cancun, Mexico. 8
Dic 2010. Keynote Address.
Correa, Rafael. Speech of the President Rafael Correa. III Summit of
OPEC. OPEC. Riyadh, Saudi Arabia, 18 Nov 2007. Keynote Address.
Constitution of the Republic of Ecuador 2008.
Daly,
Herman
development:
(2007).
selected
Ecological
essays
of
economics
Herman
and
Daly.
sustainable
Edward
Elgar
Publishing.
Easterlin, Richard (1974). Does economic growth improve the human
lot? Some empirical evidence, in Paul A. David and Melvin W. Reder,
eds., Nations and Households in Economic Growth: Essays in Honor
of Moses Abramovitz, New York: Academic Press, Inc.
Hardin, Garrett (1968). The Tragedy of the Commons, Science, Vol.
162, No. 3859, pp. 1243-1248.
Georgescu-Roegen, Nicholas (1971). The Entropy Law and the
Economic Process. Harvard University Press.
Warlenius, R., G. Pierce, and V. Ramasar (2015) Reversing the
arrow of arrears: The concept of “ecological debt” and its value
for environmental justice. Global Environmental Change. Volume
30: 21–30.